European Parliament legislative resolution of 23 May 2012 on the proposal for a Council directive on a common system of financial transaction tax and amending Directive 2008/7/EC (COM(2011)0594 – C7-0355/2011 – 2011/0261(CNS))

(Special legislative procedure – consultation)

The European Parliament
,

– having regard to the Commission proposal to the Council (COM(2011)0594),

– having regard to Article 113 of the Treaty on the Functioning of the European Union , pursuant to which the Council consulted Parliament (C7-0355/2011),

– having regard to the reasoned opinions submitted, within the framework of the Protocol No 2 on the application of the principles of subsidiarity and proportionality, by the Cypriot Parliament, the Maltese Parliament and the Swedish Parliament, asserting that the draft legislative act does not comply with the principle of subsidiarity,

– having regard to Rule 55 of its Rules of Procedure,

– having regard to the report of the Committee on Economic and Monetary Affairs and the opinions of the Committee on Development, the Committee on Budgets and the Committee on the Internal Market and Consumer Protection (A7-0154/2012),

1. Approves the Commission proposal as amended;

2. Calls on the Commission to alter its proposal accordingly, in accordance with Article 293(2) of the Treaty on the Functioning of the European Union;

3. Calls on the Council to notify Parliament if it intends to depart from the text approved by Parliament;

4. Asks the Council to consult Parliament again if it intends to amend the Commission proposal substantially;

5. Instructs its President to forward its position to the Council, the Commission and the national parliaments.

Text proposed by the Commission

Amendment

Amendment1Proposal for a directiveRecital 1

(1) The recent financial crisis has led to debates at all levels about a possible additional tax on the financial sector and in particular a financial transactions tax (FTT). This debate stems from the desire to ensure the financial sector contribute to covering the costs of the crisis and that it is taxed in a fair way vis-à-vis other sectors for the future; to dis-incentivise excessively risky activities by financial institutions; to complement regulatory measures aimed at avoiding future crises and to generate additional revenue for general budgets or specific policy purposes.

(1) The recent financial crisis has led to debates at all levels about a possible additional tax on the financial sector and in particular a financial transactions tax (FTT). This debate stems from the desire to ensure the financial sector contribute to covering the costs of the crisis and that it is taxed in a fair way vis-à-vis other sectors for the future; to dis-incentivise excessively risky activities by financial institutions; to complement regulatory measures aimed at avoiding future crises and to generate additional revenue for general budgets, inter alia as a contribution to fiscal consolidation, in order to stimulate growth and create jobs,
or for
specific policy purposes, such as development aid and fighting climate change
.

Amendment 2Proposal for a directiveRecital 2

(2) In order to prevent distortions through measures taken unilaterally by Member States, bearing in mind the extremely high mobility of most of the relevant financial transactions, and thus to ensure the proper functioning of the internal market, it is important that the basic features of a
FTT in the Member States are harmonised at Union level. Incentives for tax arbitrage in the Union and allocation distortions between financial markets in the Union, as well as possibilities for double or non taxation should thereby be avoided.

(2) In order to prevent distortions through measures taken unilaterally by Member States, bearing in mind the extremely high mobility of most of the relevant financial transactions, and thus to ensure the proper functioning of the internal market, it is important that the basic features of FTT in the Member States are harmonised, and this Directive is implemented,
at Union level. Incentives for tax arbitrage in the Union and allocation distortions between financial markets in the Union, as well as possibilities for double or non taxation should thereby be avoided. Bearing in mind the ultimate goal of a Union-wide application of FTT, should a group of Member States, including, but not limited to euro area Member States, choose to move faster by means of enhanced cooperation under Article 329 of the Treaty on the Functioning of the European Union, the model developed in this Directive would seem suitable as a basis for implementation within that group of Member States. However, an introduction of FTT in a particularly limited number of Member States could lead to a significant distortion of competition in the internal market and comprehensive measures should be taken in order to ensure that such a move does not negatively affect the functioning of the internal market.

Amendment 3Proposal for a directive Recital 2 a (new)

(2a)In line with the European Council conclusions of 17 June 2010 and taking into account that FTT will truly achieve its objectives if it is introduced at a global level, the Union should lead efforts to reach agreement on FTT at a global level. By means of setting an example for the introduction of FTT, the Union must push resolutely for a global agreement in the relevant international arena, in particular the G20, to establish a common ground for introducing a global FTT. Concrete actions in this direction should be part of the report of the Commission in the framework of the first review of this Directive.

Amendment 4Proposal for a directiveRecital 3

(3) For the internal market
to function properly
, FTT should apply to trade in a wide range of financial instruments, including structured products, both in the organised markets and ‘over-the-counter’, as well as to the conclusion and modification of all derivative contracts. For the same reason, it should apply to a broadly determined range of financial institutions.

(3) In order
to reduce the scope for tax avoidance
, relocation risk and regulatory arbitrage,
FTT should apply to trade in a wide range of financial instruments, including structured products, both in the organised markets and ‘over-the-counter’, as well as to the conclusion and modification of all derivative contracts. For the same reason, it should apply to a broadly determined range of financial institutions. Including the widest possible range of financial instruments and actors should also ensure that the tax burden is equally spread among all actors but relatively higher on more speculative and more disruptive financial transactions. The same result could not be achieved if the scope of FTT were more limited, e.g. if it took the form of a stamp duty, which would place the full tax burden on a much more limited group of instruments traded on regulated markets without fulfilling the aim of curbing excessive and harmful speculation.

Amendment 5Proposal for a directiveRecital 11 a (new)

(11a)With a view to strengthening the position of stock exchange trading, which is strictly regulated, controlled and transparent, against unregulated, uncontrolled and less transparent off-exchange trading, Member States should apply lower tax rates to financial transactions on stock exchanges than to off-exchange transactions. This will make it possible to effect a shift in trading from markets with little or no regulation to stock exchanges that are subject to strict regulation and control.

Amendment 6Proposal for a directiveRecital 12

(12) In order to concentrate the taxation on the financial sector as such rather than on citizens and because financial institutions execute the vast majority of transactions on financial markets, the tax should apply to those institutions, whether they trade in their own name, in the name of other persons, for their on own account or for the account of other persons.

(12) In order to concentrate the taxation on the financial sector as such rather than on citizens and because financial institutions execute the vast majority of transactions on financial markets, the tax should apply only
to those institutions, whether they trade in their own name, in the name of other persons, for their on own account or for the account of other persons.

Amendment 7Proposal for a directiveRecital 13

(13) Because of the high mobility of financial transactions and in order to help mitigating potential tax avoidance, the
FTT should be applied on the basis of the
residence principle.

(13) Because of the high mobility of financial transactions and in order to help mitigating potential tax avoidance and in order to ensure the widest possible coverage of actors and transactions
, FTT should be applied on the basis of a very broadly defined
residence principle, supplemented by elements of the issuance principle. In addition, for better enforcement of FTT, the ownership principle should apply.

Amendment 8Proposal for a directiveRecital 14

(14) The minimum tax rates should be set at a level sufficiently high for the harmonisation objective of this Directive to be achieved. At the same time, they
have to be low enough so that delocalisation risks are minimised.

(14) The minimum tax rates should be set at a level sufficiently high for the harmonisation objective of this Directive to be achieved, so that the financial sector makes an appropriate contribution towards the costs of the economic crisis, thus boosting the real economy
. At the same time, until the implementation of a uniform global FTT regime,those rates
have to be low enough so that delocalisation risks are minimised.

Amendment 9Proposal for a directiveRecital 15 a (new)

(15a)Since avoidance, evasion and abuse rates will partly depend on the capability of Member States to verify taxable transactions carried out on a trading venue in a third country, Member States and, where applicable, the Commission should make full use of instruments for cooperation on tax matters established by the OECD, the Council of Europe and other international organisations. If necessary, new bilateral and multilateral cooperative initiatives should be taken in this regard.

Amendment 10Proposal for a directiveRecital 16

(16) In order to allow the adoption of more detailed rules for determining whether certain financial activities constitute a significant part of an undertaking's activity, so that the undertaking can be considered a financial institution for the purposes of this Directive, as well as more detailed rules regarding protection against tax evasion, avoidance and abuse, the power to adopt acts in accordance with Article 290 of the Treaty on the Functioning of the European Union should be delegated to the Commission in respect of specifying the measures necessary to this effect. It is of particular importance that the Commission carries
out appropriate consultations during its preparatory work, including at expert level
. The Commission, when preparing and drawing-up delegated acts, should ensure a timely and appropriate transmission of relevant documents to the Council.

(16) In order to allow the adoption of more detailed rules for determining whether certain financial activities constitute a significant part of an undertaking's activity, so that the undertaking can be considered a financial institution for the purposes of this Directive, as well as more detailed rules regarding protection against tax evasion, avoidance and abuse, the power to adopt acts in accordance with Article 290 of the Treaty on the Functioning of the European Union should be delegated to the Commission in respect of specifying the measures necessary to this effect. It is of particular importance that the Commission carry
out appropriate consultations during its preparatory work, particularly with experts, non-governmental organisations (NGOs) and other stakeholders
. The Commission, when preparing and drawing-up delegated acts, should ensure a timely and appropriate transmission of relevant documents to the European Parliament and
the Council.

Amendment 11Proposal for a directiveRecital 17 a (new)

(17a)This Directive does not address the management of revenue from FTT. However, having regard to the Commission proposal for a Council regulation laying down the multiannual financial framework for the years 2014 to 2020 and in particular concerning the provisions on the Union's own resources, part of the revenue from FTT could be managed at Union level, either as a part of Union own resources or directly linked to specific Union policies and public goods. The use of part of revenue from FTT as Union own resources would reduce national contributions to the Union budget and would therefore release funds from the national budgets for other uses.

Amendment 12Proposal for a directiveRecital 17 b (new)

(17b)Only Member States are competent to raise tax.

Amendment 13Proposal for a directiveArticle 1 – paragraph 2

2. This Directive shall apply to all financial transactions, on condition that
at least one party to the transaction is established in a Member State and that
a financial institution established in the territory of a Member State is party to the transaction, acting either for its own account or for the account of another person, or is acting in the name of a party to the transaction.

2. This Directive shall apply, in accordance with Article 3,
to all financial transactions, subject to one of the following conditions:

(a)
at least one party to the transaction is established in a Member State and a financial institution established in the territory of a Member State is party to the transaction, acting either for its own account or for the account of another person, or is acting in the name of a party to the transaction; or

(b) the transaction involves a financial instrument issued by legal entities registered in the Union.

(f) a pension fund or an institution for occupational retirement provision as defined in Article 6(a) of Directive 2003/41/EC of the European Parliament and the Council, an investment manager of such fund or institution;

(f) a pension fund or an institution for occupational retirement provision as defined in Article 6(a) of Directive 2003/41/EC of the European Parliament and of
the Council on the activities and supervision of institutions for occupational retirement provision
, an investment manager of such fund or institution, and an entity set up for the purpose of investment of such funds or institutions acting solely and exclusively in the interest of such funds or institutions, shall not be considered a financial institution for the purposes of this Directive until the review of this Directive pursuant to Article 16
;

(ea) it is party, acting either for its own account or for the account of another person, or is acting in the name of a party to the transaction in relation to a financial instrument issued within the territory of a Member State or of the Union.

Amendment 17Proposal for a directiveArticle 3 – paragraph 2 a (new)

2a.For the purpose of applying paragraph 1 in a consistent manner, Member States' competent authorities shall closely cooperate with each other and with ESMA in relation to the supervision of financial markets.

Amendment 18Proposal for a directiveArticle 3 a (new)

Article 3a

Issuance

1.For the purposes of this Directive, a financial instrument is deemed to be issued within the territory of a Member State or of the Union where it is issued by a legal entity that is registered in a Member State.

2.In the case of a derivatives agreement the condition of issuance within the territory of a Member State or of the Union is fulfilled where the reference or underlying instrument is issued by a legal entity that is registered in a Member State.

3.In the case of a structured instrument, the condition of issuance within the territory of a Member State or of the Union is fulfilled where the structured instrument is based on or backed by a significant proportion of assets or financial instruments and derivatives agreement with reference to financial instruments issued by a legal entity that is registered in a Member State.

Amendment 19Proposal for a directiveArticle 3 b (new)

Article 3b

Transfer of legal title

1.A financial transaction in relation to which no FTT has been levied shall be deemed legally unenforceable and shall not result in a transfer of legal title of the underlying instrument.

2.A financial transaction as referred to in paragraph 1 shall be deemed not to fulfil the requirements for central clearing under Regulation (EU) No .../2012 of the European Parliament and the Council of ... on OTC derivatives, central counterparties and trade repositories [EMIR] or the capital adequacy requirements under Regulation (EU) No .../2012 of the European Parliament and the Council of ... on prudential requirements for credit institutions and investment firms [CRR IV].

3.In the case of automatic electronic payment schemes with or without the participation of payment settlement agents, revenue authorities of a Member State may establish a system of automatic electronic collection of FTT and certificates for transferring legal title.

Amendment 20Proposal for a directiveArticle 8 – paragraph 3

3. Member States shall apply the same rate to all financial transactions that fall under the same category pursuant to paragraph 2 (a) and (b).

3. In order to avoid tax arbitrage,
Member States shall apply the same rate to all financial transactions that fall under the same category pursuant to paragraph 2 (a) and (b).

Amendment 21Proposal for a directiveArticle 8 – paragraph 3 a (new)

3a.Member States shall apply a lower rate of tax to financial transactions on stock exchanges than to those in off-exchange trading. This shall apply to the financial transactions referred to in Articles 5 and 6.

Amendment 22Proposal for a directiveArticle 9 – paragraph 2

2. Where a financial institution acts in the name or
for the account of another financial institution only that other financial institution shall be liable to pay FTT.

2. Where a financial institution acts in the name,
for the account or by order
of another financial institution,
only that other financial institution shall be liable to pay FTT. Where several financial institutions are involved in such a process only the original institution listed as a trader shall be liable to pay FTT.

Amendment 23Proposal for a directiveArticle 10 – paragraph 1

1. Member States shall lay down registration,
accounting,
reporting obligations and other obligations intended to ensure that FTT due to the tax authorities is effectively paid.

1. Member States shall lay down accounting and
reporting obligations and other obligations intended to ensure that FTT due to the tax authorities is effectively paid.

Amendment 24Proposal for a directiveArticle 10 – paragraph 1 a (new)

1a.A financial institution shall, within six months from the entry into force of this Directive, register at the tax authorities of the Member State where it is deemed to be established in accordance with Article 3(1).

Amendment 25Proposal for a directiveArticle 10 – paragraph 1 b (new)

1b.A Member State shall inform other Member States of the financial institutions registered at their territory.

Amendment 26Proposal for a directiveArticle 10 – paragraph 5 a (new)

5a.Member states shall disclose annually to the Commission and to Eurostat transaction volumes against which revenues have been collected.

Amendment 27Proposal for a directiveArticle 11 – title

Specific provisions relating to the prevention of evasion, avoidance and abuse

Specific provisions relating to transparency and
the prevention of tax
evasion, avoidance and abuse

Amendment 28Proposal for a directiveArticle 11 – paragraph 1

1. Member States
shall adopt measures
to prevent tax evasion, avoidance and abuse.

1a.The Commission shall establish an expert working group (FTT Committee) comprising representatives from the Member States that supervises the application of this Directive. Member States shall appoint bodies with sufficient competence to take immediate action in the case of abuse.

The FTT Committee shall supervise financial transactions in order to detect avoidance schemes, to propose countermeasures and to coordinate the implementation of such countermeasures at national level where appropriate.

Amendment 30Proposal for a directiveArticle 11 – paragraph 3 a (new)

3a.The administrative burden imposed on tax authorities through the introduction of FTT shall be kept to a minimum and, to that end, the Commission shall encourage cooperation between national tax authorities.

Amendment 31Proposal for a directiveArticle 11 – paragraph 3 b (new)

3b.Eurostat shall collect and publish annually the financial flows subject to FTT within the Union.

Amendment 32Proposal for a directiveArticle 11 – paragraph 3 c (new)

3c.In order to verify taxable transactions carried out on a trading venue in a third country, Member States and, where applicable, the Commission shall make full use of instruments for cooperation on tax matters established by relevant international organisations.

Amendment 33Proposal for a directiveArticle 11 – paragraph 3 d (new)

3d.In order to adapt Member States' tax administrations to the provisions of this Directive and, in particular, in relation to administrative cooperation referred to in paragraph 3, Member States shall provide them with necessary and adequate human resources and technical equipment. Particular attention shall be focused on providing training for officials.

Amendment 34Proposal for a directiveArticle 11 – paragraph 3 e (new)

3e.The Commission shall conduct a thorough examination to analyse the administrative costs for regional and local authorities arising from the implementation of this Directive.

Amendment 35Proposal for a directiveArticle 16

Every five years and for the first time by 31 December 2016, the Commission shall submit to the Council a report on the application of this Directive and, where appropriate, a proposal for its modification.

Every five years and for the first time by 31 December 2016, the Commission shall submit to the European Parliament and
the Council a report on the application of this Directive and, where appropriate, a proposal for its modification.

In that report the Commission shall, at least, examine the impact of the
FTT on the proper functioning of the internal market, the financial markets and the real economy and
it shall take into account the progress on taxation of the financial sector in the international context.

In that report the Commission shall, at least, examine the impact of FTT on the proper functioning of the internal market, the financial markets and the real economy. It shall also assess the impact of certain provisions such as the appropriate scope of FTT, the possibility to distinguish between different categories of financial products and assets with a view to charging higher rates after a certain ratio of cancelled orders, the rate of taxation and the exemption of institutions for occupational retirement provision under Article 2(1)(7)(f). Where the Commission finds that distortion or abuse has taken place, it shall propose appropriate remedies.

In addition, the Commission shall analyse and report on national FTT tax revenue collection based on the residency of financial institutions and to what extent that collection differs from tax distribution based on the underlying customer residency, namely to what extent financial consolidation centralises tax revenues in financial centres.

In its reports, the Commission shall take into account different forms of taxation of the financial sector, under discussion or already in place, and progress regarding the introduction of a wider FTT. Where appropriate, the Commission shall put forward proposals or undertake action in order to facilitate convergence and promote the introduction of a global FTT.